Energy expert advises against country walking into fossil fuel trap

By Rathindra Kuruwita

The unit cost of a regasified liquefied natural gas (R-LNG) power plant will be Rs. 19 at the current exchange rate (Rs. 200 per dollar) and will further increase as the rupee depreciates, energy expert Vidhura Ralapanawe told The Island yesterday.

However, according to the CEB, the average selling price of a unit of electricity is around Rs.16.88.

Ralapanawe said that some experts were arguing for natural gas for electricity generation in Sri Lanka as a ‘low-cost option’. However, it would only be feasible if Sri Lanka printed US dollars, he said.

“I have taken the CEB’s own cost calculation for the 300MW LNG power plant (originally tendered in 2016) and is awaiting the PPA approval. The tender used a fixed exchange rate for 20 years at Rs 150 per USD. No other assumptions of the CEB (including fuel costs) has been changed.

“Revising the rate to 200 (January 2021) gives the RLNG-based power cost to be Rs 19 per unit. Using a 3% YoY depreciation moves exchange rate to Rs 225 in 2024 – the year we are likely to get RLNG (if it comes), and the cost moves to Rs. 21.70. According to the CEB, the average selling price is around Rs. 16.88.”

Ralapanawe said that the price would increase with transmission, distribution and other costs, making the CEB increase electricity tariff by a significant margin

“There is a recommendation by an expert associated with the CEB to increase tariffs by Rs. 2.30 per unit, per year. To meet the losses incurred by the Board.”

Ralapanawe said that the CEB could either increase tariffs to meet the losses or look at cheaper sources of electricity. Renewable energy was tendered in rupee between 9 – 13 Rupees per kWh, he added.

“As a country full of renewables, we should ask why we are purposefully walking into this fossil fuel trap.”